oversight

Federal Aviation Administration: Reauthorization Provides Opportunities to Address Key Agency Challenges

Published by the Government Accountability Office on 2003-04-10.

Below is a raw (and likely hideous) rendition of the original report. (PDF)

                            United States General Accounting Office

GAO                         Testimony
                            Before the Committee on Commerce,
                            Science, and Transportation, U.S. Senate


For Release on Delivery
Expected at 9:30 a.m. EDT
Thursday, April 10, 2003    FEDERAL AVIATION
                            ADMINISTRATION
                            Reauthorization Provides
                            Opportunities to Address
                            Key Agency Challenges
                            Statement of Gerald L. Dillingham
                            Director, Civil Aviation Issues




GAO-03-653T
                                               April 10, 2003


                                               FEDERAL AVIATION ADMINISTRATION

                                               Reauthorization Provides Opportunities
Highlights of GAO-03-653T, a testimony
before the Senate Committee on                 to Address Key Agency Challenges
Commerce, Science, and Transportation




Much has changed since the                     Increasing capacity and service in the national airspace system poses several
Wendell H. Ford Aviation                       challenges. While airports currently receive enough funding to cover FAA’s
Investment and Reform Act for the              estimate of their planned capital development costs, a declining surplus in
21st Century (AIR-21) reauthorized             the trust fund that helps to support development and the need to spend up to
the Federal Aviation                           $5 billion over the next 5 years for security-related capital improvements
Administration’s (FAA) programs 3
years ago. At that time, air traffic
                                               make the financial outlook for the next 5 to 8 years uncertain. Runway
was increasing, and concerns about             development, the principal means of increasing capacity, is now taking 10 to
congestion and flight delays were              14 years to complete, in large part because of time-consuming environmental
paramount. Since then, the                     reviews and community concerns. Providing air service for small
downturn in the nation’s economy,              communities is also becoming more difficult as costs increase and passenger
the terrorist attacks of September             ticket revenues decline. Intermodal alternatives may hold promise.
11, 2001, and, most recently, the
war in Iraq have taken a heavy toll            Efforts to improve the efficiency of the national airspace system by
on aviation. Analysts nonetheless              modernizing the air traffic control system face challenges despite actions
expect the demand for air travel to            taken by the Congress and the administration to eliminate the cost overruns,
rebound, and the nation’s aviation             schedule delays, and performance shortfalls that have plagued FAA's
system must be ready to
accommodate the projected growth
                                               modernization efforts. Overall, FAA is improving its management of the air
safely and securely.                           traffic modernization program and has implemented some systems, but key
                                               projects continue to experience problems.
The current reauthorization of
FAA’s programs provides an                     To enhance aviation safety, FAA and the aviation industry have undertaken
opportunity for the Congress and               an initiative to reduce the fatal accident rate, and FAA is working to
the administration to focus on                 strengthen its safety inspections of airlines’ operations. Interagency
challenges in increasing aviation              coordination of aviation safety and aviation security activities has emerged
capacity, efficiency, and safety and           as a challenge with the transfer of aviation security responsibilities from
in controlling aviation program                FAA to the Transportation Security Administration.
costs.
                                               FAA faces challenges in implementing controls over its costs. Although it
                                               has partially implemented a new cost accounting system that enables it to
This testimony does not contain                track 70 percent of its air traffic services costs, this system lacks internal
recommendations. However, GAO                  controls over $3.1 billion in labor costs, according to the Department of
reports containing relevant                    Transportation’s Inspector General. Congressional oversight is important to
recommendations are listed among               ensure that FAA implements controls and spends its resources effectively.
the Related GAO Products
following the testimony.
                                               Increasing Capacity through Runway Construction




www.gao.gov/cgi-bin/getrpt?GAO-03-653T.

To view the full report, including the scope
and methodology, click on the link above.
For more information, contact Gerald L.
Dillingham at (202) 512-2834 or
dillinghamg@gao.gov.
    Mr. Chairman and Members of the Committee:

    We are here today to discuss the reauthorization of federal aviation
    programs and issues relevant to ensuring the safe and efficient operation
    of the national airspace system.1 Much has changed since the Wendell H.
    Ford Aviation Investment and Reform Act for the 21st Century (AIR-21)
    reauthorized the Federal Aviation Administration’s (FAA) programs 3
    years ago. At that time, as you know, air traffic was increasing, and
    concerns about congestion and flight delays were paramount. Since then,
    the downturn in the nation’s economy, the terrorist attacks of September
    11, 2001, and, most recently, the war in Iraq have taken a heavy toll on
    aviation. Flights that were once filled are now being canceled for lack of
    business, and major air carriers are in serious financial difficulty.
    Furthermore, as the federal budget deficit has increased, competition for
    federal resources has intensified. Analysts nonetheless expect the demand
    for air travel to rebound, and the nation’s aviation system must be ready to
    accommodate the projected growth safely and securely. The current
    slowdown in the economy and in the aviation industry has created a
    window of opportunity to prepare for this growth without the pressures of
    congestion and flight delays. My statement today focuses on the
    challenges that the Congress, the administration, and FAA face in
    increasing aviation capacity, efficiency, and safety, and maintaining
    controls over costs. My statement is based primarily on our published
    reports, as well as our ongoing work for this Committee discussed in the
    scope and methodology section at the end of the statement.

    In summary:

•   Increasing capacity and service in the national airspace system poses
    several challenges for the Congress and the administration during this
    reauthorization process. Chief among them is deciding how much of
    airports’ planned capital development should be funded to increase
    capacity and service, as well as improve the efficiency and safety of the
    national airspace system. Funds for airports’ capital development have
    increased over the last 5 years, in part because of increases in the federal
    grant funding provided to airports under the Airport Improvement
    Program. Current funding levels are sufficient to cover much of the
    estimated cost of planned capital development. However, future funding


    1
     See the Aviation Investment and Revitalization Vision Act, a Senate bill to reauthorize
    federal aviation programs and the administration’s draft reauthorization proposal, the
    Centennial of Flight Aviation Authorization Act, or “Flight 100.”



    Page 1                                                  GAO-03-653T FAA Reauthorization
    levels may be affected by changes in the allocation of Airport
    Improvement Program grant funds and by projected decreases in the
    Airport and Airway Trust Fund, which supports the Airport Improvement
    Program and other FAA accounts. Other challenges include building
    runways expeditiously to increase capacity and providing air service to
    small communities. Runway development now takes 10 to 14 years,
    primarily because of time-consuming environmental reviews and
    community concerns. Two federal programs, the Essential Air Service and
    the Small Community Air Service Development Pilot programs, help bring
    air service to small communities, but the costs of this service are
    increasing while passenger ticket revenues are declining. The
    administration is proposing an approach to streamline the environmental
    reviews required for runway development, and intermodal alternatives,
    such as rail or bus service, could provide access to the national air
    transportation system for some small communities.

•   Efforts to improve the efficiency of the national airspace system by
    modernizing its principal component, the air traffic control system, face
    ongoing challenges despite actions taken by the Congress and the
    administration to eliminate the cost overruns, schedule delays, and
    performance shortfalls that have plagued FAA’s air traffic modernization
    program and led us to designate this program as high risk. These actions
    include granting FAA acquisition and human capital flexibilities in 1996
    and creating a new, three-component structure to improve the oversight,
    management, and operation of the air traffic control system in 2000. Our
    work has shown that FAA has responded to these actions to varying
    degrees, but more remains to be done. Overall, FAA is improving its
    management of the air traffic modernization program and has
    implemented some systems, but key projects continue to experience cost,
    schedule, and performance problems. Additionally, FAA has used its
    acquisition flexibilities to establish an acquisition management system and
    its human capital flexibilities to fully or partially implement human capital
    reform initiatives. The acquisition management system has provided FAA
    with a structured management approach for selecting and controlling its
    investments, and the human capital reform initiatives are affording
    opportunities for FAA to manage its workforce more efficiently. However,
    in implementing both of these reforms, FAA has not yet incorporated
    important processes or elements for evaluating the results of its efforts,
    modifying these efforts as necessary, and holding its managers
    accountable. Finally, one of the three components of the new structure for
    improving the performance of the air traffic control system has been
    implemented. The oversight component, the Air Traffic Services
    Subcommittee, has been meeting since January 2001 and emphasizing
    performance management, but without the management and operating


    Page 2                                        GAO-03-653T FAA Reauthorization
    components, the new structure is not yet functioning as intended.
    Completing the implementation of, and continuing to improve, these
    efforts will be important to enhancing the efficiency of the air traffic
    control system.

•   Important steps have been taken to enhance aviation safety, but some
    challenges remain. Safer Skies, an initiative designed by FAA and the
    aviation industry to reduce the nation’s fatal aviation accident rate by 80
    percent by 2007, is the centerpiece of these efforts to improve aviation
    safety. This initiative began in 1998, and many preventive actions are
    under way but have not yet been fully implemented. Another key effort to
    improve aviation safety is FAA’s Air Transportation Oversight System,
    which was redesigned to provide more effective inspections of the nation’s
    airline operations. In reporting on this system in 1999, we noted that it
    incorporated important features to ensure that airlines have systems to
    control risks and prevent accidents, but that it had encountered startup
    problems with data collection and program guidance.2 Many of these
    problems were not yet fully resolved when the Department of
    Transportation’s Inspector General reported on the inspection system last
    year.3 Finally, because of the often vital link between aviation safety and
    aviation security, it will be critical for FAA to ensure that aviation safety is
    maintained as the Department of Homeland Security’s Transportation
    Security Administration implements new security enhancements.

•   With the decline in revenues to the Airport and Airway Trust Fund—the
    principal source of funding for most of FAA’s operations, facilities and
    equipment, and grant programs—it is especially important that FAA
    control or reduce costs, run its programs efficiently, and detect and
    prevent fraudulent activities. FAA, however, faces challenges in
    implementing controls over its costs. For example, during fiscal year 2000,
    weaknesses in the internal controls over FAA’s purchase card program
    contributed to $5.4 million in improper purchases by FAA employees and
    over $630,000 in purchases that were considered wasteful or questionable.
    In addition, FAA has partially implemented a new cost accounting system
    that enables it to track 70 percent of its air traffic services costs; however,
    according to the Department of Transportation’s Inspector General, this


    2
     U.S. General Accounting Office, Aviation Safety: FAA’s New Inspection System Offers
    Promise, but Problems Need to Be Addressed, GAO/RCED-99-183 (Washington, D.C.: June
    28, 1999).
    3
     U.S. Department of Transportation, Office of Inspector General, Report on the Air
    Transportation Oversight System: Federal Aviation Administration, AV-2002-088
    (Washington, D.C.: Apr. 8, 2002).



    Page 3                                                GAO-03-653T FAA Reauthorization
                            system lacks internal controls over $3.1 billion in labor costs. The
                            Inspector General further noted that a portion of this system, if
                            implemented as designed, could provide workforce data that would be
                            helpful in determining how many controllers are needed and where. These
                            data would assist FAA in planning for the anticipated retirement of large
                            numbers of air traffic controllers in the near and long term.


                            During this reauthorization period, the Congress and the administration
Efforts to Increase         face several key challenges in attempting to increase the capacity of the
Aviation Capacity and       national airspace system and expand service to small communities. These
                            challenges include determining (1) how much airport capital development
Service Face Funding        is needed, (2) how that development will be funded, (3) how assistance for
and Other Challenges        enhancing air service to small communities will be provided, and (4) how
                            the current process for enhancing capacity, particularly the runway
                            development process, can be expedited.


FAA and the Airport         FAA and the Airport Council International (ACI), an organization
Industry Have Developed     representing the airport industry, have developed two different estimates
Different Estimates of      of airports’ planned capital development costs that are based on two
                            different sets of projects. According to FAA’s estimate, which includes
Airports’ Planned Capital   only projects that are eligible for Airport Improvement Program (AIP)
Development Costs           grants, such as runways, taxiways, and noise mitigation and noise
                            reduction efforts, the total cost of airport development will be about $46
                            billion, or over $9 billion per year, for 2001 through 2005. FAA’s estimate is
                            based on the agency’s National Plan of Integrated Airport Systems, which
                            FAA published in August 2002. ACI’s estimate includes all of the projects
                            in FAA’s estimate, plus other planned airport capital projects that may or
                            may not be eligible for AIP grants. Projects that are not eligible for AIP
                            funding include parking garages, hangars, and expansions of commercial
                            space in terminals. ACI estimates a total cost of almost $75 billion, or
                            nearly $15 billion per year, for 2002 through 2006. Neither ACI’s nor FAA’s
                            estimate includes funding for the terminal modification projects that are
                            needed to accommodate the new explosives detection systems required to
                            screen checked baggage. ACI estimates that these projects will cost about
                            $3 billion to $5 billion over the next 5 years.

                            Although there is a difference of $6 billion a year between FAA’s and ACI’s
                            estimates of planned development costs, both estimates cover projects for
                            every type of airport. As table 1 indicates, the estimates are identical for all
                            but the large- and medium-hub airports, which are responsible for
                            transporting about 90 percent of the traveling public. For these airports,


                            Page 4                                          GAO-03-653T FAA Reauthorization
                            ACI’s estimate of planned development costs is about twice as large as
                            FAA’s. As the Congress moves forward with reauthorizing FAA’s
                            programs, it will have to determine what level of planned capital
                            development is appropriate to increase the capacity, efficiency, and safety
                            of the national airspace system.

                            Table 1: Average Annual Planned Development Costs Estimated by FAA and ACI,
                            by Airport Type, 2001-2006

                                Dollars in millions
                                                                                  Estimated average annual costs
                                Airport type           Number of airports                    FAA               ACI
                                Large hub                               31                 $4,855           $8,554
                                Medium hub                              37                  1,073            3,109
                                Small hub                               71                    675              675
                                Nonhub                                280                     807              807
                                Other commercial
                                service                                   124                   142                 142
                                Reliever                                  260                   526                 526
                                General aviation                        2,558                 1,167               1,167
                                Total                                   3,364                $9,245             $14,980
                            Source: FAA and ACI.




Airports’ Ability to Fund   Over the past 5 years, the ability of airports—especially smaller airports—
Planned Capital             to fund their capital development projects has improved, in part because
Development Has             AIR-21 increased both the total amount of funding for AIP grants and the
                            proportion of AIP funding that went to smaller airports. In 1998, we
Improved                    reported that large- and medium-hub airports could fund about 79 percent
                            of their planned capital development and smaller airports could fund
                            about 52 percent of their planned capital development if they continued to
                            receive funding at prior years’ levels. In 2003, the funding ability of both
                            groups of airports increased. As shown in figure 1, large- and medium-hub
                            airports could fund about 80 percent of their planned capital development,
                            an increase of 1 percentage point, while smaller airports could fund about
                            73 percent of their planned capital development, an increase of 21
                            percentage points, assuming the continuation of prior years’ funding
                            levels.4




                            4
                             Over the past 5 years, the amount of funding available to airports for planned capital
                            development ranged from about $7 billion to $13 billion annually.



                            Page 5                                                  GAO-03-653T FAA Reauthorization
Figure 1: Ability of Smaller and Larger Airports to Fund Estimated Planned Capital
Development in 1998 and 2003




The primary reason why smaller airports are able to fund 73 percent of
their planned development in 2003, rather than the 52 percent we reported
in 1998, is that they have benefited significantly from the increases in AIP
grants, which are a larger source of funding for smaller airports than for
larger airports. In addition, smaller airports have received an increasing
share of AIP grants because of statutorily required changes in the
distribution of AIP grants. For example, in AIR-21, the Congress increased
the funding for two grant categories that primarily or exclusively benefit
smaller airports—the state apportionment fund and the small airport
fund—and created general aviation entitlement grants, which also benefit
smaller airports. The Senate’s and the administration’s reauthorization
proposals continue to support increases in the amount of AIP grant
funding awarded to smaller airports. In spite of the progress that has been
made, over 25 percent of planned capital development is not funded. The


Page 6                                            GAO-03-653T FAA Reauthorization
                              Congress needs to be mindful of this situation as it considers
                              reauthorization issues.

Changes in the Use of AIP     The use of AIP grants to fund new airport security requirements and
Grants and Additional         additional decreases in the Airport and Airway Trust Fund’s5 revenues
Decreases in Trust Fund       could affect the future ability of airports to fund their planned capital
                              development. In recent fiscal years, airports obtained most of their funding
Revenue Could Affect          for planned capital development from bonds, AIP grants, and passenger
Airports’ Future Funding      facility charges.6 Because the Trust Fund is the source of funding for AIP
Ability                       grants, its financial condition is important to the ability of airports to fund
                              capital development, and decreases in its revenues could reduce the
                              amount of funding for airport planned capital development. Reductions in
                              AIP grant funds would have the greatest effect on smaller airports, which
                              derive most of their planned capital development funding from AIP grants,
                              whereas large- and medium-hub airports derive most of their funding from
                              bonds.

Continued Use of AIP Grant    According to FAA officials, FAA plans to allocate the same amount of AIP
Funds for Security Projects   grant funds for new security projects at airports in fiscal year 2003 as it
Would Reduce Funding for      allocated in fiscal year 2002—$561 million. As we reported in October
Capacity Projects             2002,7 the use of AIP grants for security projects reduced the funding
                              available for other airport development projects, such as projects to bring
                              airports up to FAA’s design standards and reconstruction projects, and
                              caused FAA to defer three letter-of-intent payments totaling $28 million to
                              three airports until fiscal year 2003 or later.8 Among the key
                              reauthorization issues facing the Congress are how the funding needs for
                              capacity and security projects will be balanced and how the new security
                              requirements, including the terminal modification projects that are
                              expected to cost $3 billion to $5 billion, will be funded.



                              5
                               The Airport and Airway Trust Fund was established by the Airport and Airway Revenue
                              Act of 1970 (P.L. 91-258) to aid in funding the development of a nationwide airport and
                              airway system and to fund FAA investments in air traffic control facilities. The Trust Fund
                              is supported by a number of excise taxes, including taxes on passenger tickets, fuel, and
                              cargo.
                              6
                               Under the Passenger Facility Charge program, airports with FAA’s approval may charge
                              passengers up to $4.50 for boarding airplanes at their facilities.
                              7
                               U.S. General Accounting Office, Airport Finance: Using Airport Grant Funds for
                              Security Projects, GAO-03-27 (Washington, D.C.: Oct. 15, 2002).
                              8
                               Letters of intent represent a nonbonding commitment from FAA to provide multiyear
                              funding to an airport beyond the current AIP authorization period.



                              Page 7                                                 GAO-03-653T FAA Reauthorization
Additional Declines in Airport   The future ability of airports to fund planned capital development may be
and Airway Trust Fund            affected by uncertainties surrounding the condition of the Trust Fund. As
Revenue Could Also Affect        you know, the Trust Fund is the source of funding not only for AIP grants
Amount of AIP Grant Funds        but also for other FAA accounts, including facilities and equipment;
Available for Future Capital     research, engineering, and development; and most operations. Revenues
Development                      to the Trust Fund come from several types of taxes, including passenger
                                 ticket and fuel taxes. Although projections made in November 2002
                                 indicate that the Trust Fund will be able to meet its traditional obligations
                                 over the next 10 years, the financial outlook for the next 5 to 8 years is
                                 uncertain, in part, because passenger traffic has decreased with the
                                 slowdown in the economy. Current estimates indicate that between fiscal
                                 year 2003 and fiscal year 2007, the Trust Fund’s 2002 uncommitted balance
                                 of about $4.8 billion will decline by about $4 billion, leaving a balance of
                                 less than a billion dollars. In addition, if revenues fall short of current
                                 projections, the Trust Fund’s uncommitted balance may be zero. Under
                                 this scenario, AIP grants and other FAA accounts supported by the Trust
                                 Fund could potentially receive less funding, and the Congress and the
                                 administration would have to decide how to offset the potential decreases.

                                 As figure 2 shows, from 1999 through 2002, revenues to the Trust Fund
                                 have declined, while expenditures from the fund have increased. Revenues
                                 fell from about $11 billion in 1999 to almost $10 billion in 2002, a decrease
                                 of almost 10 percent. During the same period, expenditures increased from
                                 about $8 billion to about $12 billion, an increase of about 47 percent. As a
                                 result, the uncommitted balance (surplus) has fallen by nearly 35 percent,
                                 from $7 billion in 1999 to almost $5 billion in 2002.




                                 Page 8                                        GAO-03-653T FAA Reauthorization
Figure 2: Financial Condition of the Airport and Airway Trust Fund




The major reason for the decline in Trust Fund revenues was a drop in
passenger ticket tax revenues, which fell by nearly $1.2 billion from 1999
to 2002. The increase in Trust Fund expenditures from 1999 through 2002,
amounting to almost $4 billion, can be attributed primarily to increases in
funding for FAA operations and AIP grants, which accounted for about 47
percent and about 34 percent of the total increase, respectively.

In addition, the administration is proposing actions that would further
reduce the Trust Fund balance over the next several years. Specifically,
the President’s fiscal year 2004 budget request would increase the
percentage of FAA operations funded by the Trust Fund from 75 percent9
to 79 percent. The decrease in Trust Fund revenues and increase in Trust
Fund expenditures presents an issue that the Congress may want to
address as it moves forward with the reauthorization process.




9
This was the average for 1998 through 2002.



Page 9                                            GAO-03-653T FAA Reauthorization
Resolving Challenges to   While there is a general consensus that building runways is one of the
Runway Development        most effective ways to increase capacity in the national airspace system,
Remains an Important      resolving the challenges associated with planning and building runways is
                          an important issue that is directly related to enhancing capacity. In
Issue                     December 2002, FAA published the most recent version of its Operational
                          Evolution Plan, a 10-year plan to increase the capacity and efficiency of
                          the national airspace system, primarily by building runways.10 Figure 3
                          illustrates how capacity will be increased at one airport through runway
                          construction.




                          10
                           In addition to runways, the plan addresses capacity enhancements designed to make
                          more efficient use of the airspace.



                          Page 10                                             GAO-03-653T FAA Reauthorization
Figure 3: Increasing Airport Capacity through Runway Development




If successfully carried out, FAA’s Operational Evolution Plan would
substantially increase capacity and improve efficiency. However, FAA
faces several challenges in implementing the plan. First, the success of the
plan depends on adequate funding and on the consensus of FAA’s aviation


Page 11                                        GAO-03-653T FAA Reauthorization
industry partners. Yet according to the most recent version of the plan, the
timing and implementation of some activities may be in jeopardy because
of the current economic situation and the uncertain viability of some
industry participants. For example, the plan calls for the airline industry to
invest $11 billion in new equipment for aircraft. FAA is currently reviewing
the ability of the airlines to make this investment. Second, as noted, the
plan relies heavily on runway development to increase capacity, but the
most recent version of the plan reports mixed results in building new
runways. While the plan indicates that one new runway will be built during
the next 10 years, it points out that another runway has been canceled and
the construction of six additional runways has been delayed because of
local situations.

In January 2003, we reported that airports spent about 10 years planning
and building recently completed runways and expect to spend about 14
years on runways that are not yet completed.11 We also reported that
several external factors affect how much time is spent planning and
building runways, and several airports with unfinished runway projects
identified significant challenges that had delayed the completion of their
projects. While many airports believed that completing the environmental
review phase was a significant challenge and is an issue that warrants
immediate attention, airports also faced obstacles that some said were as
onerous as the environmental review phase. They identified significant
challenges in reaching agreement with community interest groups during
the planning phase and in mitigating the potential impact of aircraft noise
on the surrounding community. Although there may be no single solution
to resolving all of the issues involved in planning and building runways,
the federal government and airport authorities are taking some action. For
example, the Senate’s and the administration’s reauthorization proposals
call for streamlining the environmental review of transportation
infrastructure projects.

Recognizing that building new runways is not always a practicable way to
increase capacity at some airports, we identified three alternatives to
building runways in our December 2001 report:12



11
 U.S. General Accounting Office, Aviation Infrastructure: Challenges Related to Building
Runways and Actions to Address Them, GAO-03-164 (Washington, D.C.: Jan. 30, 2003).
12
 U.S. General Accounting Office, National Airspace System: Long-term Capacity
Planning Needed Despite Recent Reduction in Flight Delays, GAO-02-185 (Washington,
D.C.: Dec. 14, 2001).


Page 12                                              GAO-03-653T FAA Reauthorization
                           •   Find ways to manage and distribute demand within the system’s existing
                               capacity at busy airports such as LaGuardia, by, for example, limiting the
                               number of takeoffs and landings during peak periods or limiting the ability
                               of general aviation aircraft to use especially congested airports (under
                               current law, all aircraft have equal access to even the largest airports).
                               Airports are restricted in using pricing to reflect the scarcity and
                               congestion of airspace.

                           •   Add capacity by using nearby airports that have available capacity.

                           •   Examine other modes of intercity travel, such as high-speed rail, where
                               metropolitan areas are relatively close, to form an integrated, intermodal
                               transportation network.

                               Accordingly, we recommended that the Department of Transportation
                               (DOT) begin a more extensive evaluation of initiatives, including
                               intermodal solutions and a dialogue with transportation stakeholders, as a
                               basis for developing a comprehensive blueprint for addressing the nation’s
                               long-term transportation needs. DOT has recognized the need for more
                               and better long-range planning on the potential use of such measures and
                               agreed with our recommendation. The Department’s evaluation efforts are
                               in the beginning stages. The current hiatus in air traffic growth creates an
                               opportunity for the development of long-term transportation plans.


Federal Programs to Help       While the need for greater capacity is a vital issue for some large- and
Small Communities              medium-hub airports, the primary issue at other airports that serve small
Improve Air Service Face       communities is to obtain or retain commercial air service. The
                               reauthorization process provides an opportunity for the Congress to
Budgetary Pressures and        clarify the federal strategy for helping small communities acquire the
Questions about Their          commercial air service they desire. Currently, the challenges that small
Effectiveness                  communities have long faced in obtaining or retaining commercial air
                               service are increasing as many U.S. airlines try to stem unprecedented
                               financial losses through numerous cost-cutting measures, including
                               reducing or eliminating service in some markets. Small communities feel
                               such losses disproportionately because they may have service from only
                               one or two airlines. For them, reductions can mean no air service at all.

                               The Essential Air Service (EAS) program, authorized under the Airline
                               Deregulation Act of 1978, guarantees that small communities served
                               before deregulation will continue to receive a certain level of scheduled air
                               service. Its costs have more than tripled since fiscal year 1995, and
                               indications are that without changes to the program, the demand for


                               Page 13                                       GAO-03-653T FAA Reauthorization
subsidies will soon exceed the program’s $113 million appropriation for
fiscal year 2003. At the same time, aggregate passenger levels at EAS-
subsidized airports continue to fall. Often fewer than 10 percent of a
community’s potential passengers use the subsidized local service; the rest
choose to drive to their destination or drive to a larger airport that offers
lower fares or more frequent service to more destinations. In 2000, the
median number of passengers on each EAS-subsidized flight was three.
The administration’s budget proposal for fiscal year 2004 would
substantially reduce the federal subsidy for small community air service
and require communities that wish to retain the service to help subsidize
it. Specifically, the budget proposal would reduce federal EAS funding
from $133 million in 2003 to $50 million in 2004, alter the eligibility criteria
for funding, and require nonfederal matching funds. Consistent with its
budget proposal, the administration’s reauthorization proposal would
restructure the EAS program to direct its resources to the small
communities with the greatest need to maintain access to national air
transportation service. The Senate bill proposes to reauthorize funding for
the program at current levels.

The Small Community Air Service Development Pilot Program, authorized
as part of AIR-21, provides grants to communities to enhance local air
service. In fiscal year 2002, 180 communities requested over $142 million
in air service development grants, and $20 million was appropriated. In
March 2003, we reported that the program funded some innovative
approaches.13 For example, Mobile, Alabama, received about $450,000 to
provide ground-handling services to an airline, and Caspar, Wyoming,
received $500,000 to purchase and lease back an aircraft to an airline to
ensure service to the community. The program also funded the same types
of projects that many small communities have undertaken in recent years,
such as evaluations of marketing activities and the use of financial
incentives to encourage airlines to either start or enhance service.
According to our analysis of similar approaches used by about 100 small
communities, financial incentives offered the most promise for attracting
new or additional service. However, the additional service typically ended
with the incentives. The sustainability of such improvements in air service
over the longer term appeared to depend on the community’s size and
ability to demonstrate a commitment to that air service, either by



13
 U.S. General Accounting Office, Commercial Aviation: Issues Regarding Federal
Assistance for Enhancing Air Service to Small Communities, GAO-03-540T (Washington,
D.C.: Mar. 11, 2003).



Page 14                                           GAO-03-653T FAA Reauthorization
                         providing a profitable passenger base or through direct financial
                         assistance. As you know, the administration’s fiscal year 2004 budget
                         proposal would eliminate the funding for this pilot program. It is too soon
                         to determine how effective the various types of initiatives funded through
                         this program might prove to be. Other options for making the national air
                         transportation system more accessible to small communities might include
                         intermodal initiatives such as those we proposed as alternatives to runway
                         development.


                         Improving the efficiency of the air traffic control system will be important
Efforts to Improve the   to accommodate the expected return to pre-September 11 air traffic levels.
Efficiency of the Air    Efforts to achieve this improvement pose continuing challenges, as FAA
                         attempts to put acquisition management and human capital reforms in
Traffic Control          place and establish an effective oversight and organizational structure to
System Face Ongoing      help ensure that resources are spent cost-effectively and improvements
                         are realized.
Challenges

FAA’s Air Traffic        To increase the safety, capacity, and efficiency of the national airspace
Modernization Remains    system, FAA undertook a major effort in 1981 to modernize and replace
High Risk                aging air traffic control equipment. This effort, which includes major
                         projects in such areas as communications, surveillance, navigation, and
                         weather, has been plagued by cost overruns, schedule delays, and
                         performance shortfalls. As a result, we designated FAA’s air traffic
                         modernization program as high risk in 1995, and we continue to designate
                         it as such.14 Figure 4 combines our and the DOT Inspector General’s
                         analysis of FAA’s progress in meeting cost and schedule goals for selected
                         air traffic control projects—the Standard Terminal Automation
                         Replacement System (STARS), Wide Area Augmentation System (WAAS),
                         Next-Generation Air/Ground Communication (NEXCOM), free flight, Local
                         Area Augmentation System (LAAS), and Integrated Terminal Weather
                         System (ITWS).




                         14
                          U.S. General Accounting Office, High-Risk Series: An Update, GAO-03-119 (Washington,
                         D.C.: Jan. 2003).



                         Page 15                                             GAO-03-653T FAA Reauthorization
Figure 4: Status of Selected FAA Air Traffic Control Projects




FAA is making progress in managing the air traffic control modernization
effort and has implemented some key projects. For example, the agency
has replaced the automated color display equipment used by air traffic
controllers to control traffic in some facilities (Display System
Replacement); installed the initial phase of the computer that receives,
processes, and tracks aircraft movement throughout the airspace system
(HOST computer); and implemented some free flight technologies that are
expected to allow for more efficient use of the system by improving
operations in various segments of flight. Figure 5 shows an FAA
representative using the Display System Replacement to monitor and
handle air traffic.




Page 16                                            GAO-03-653T FAA Reauthorization
Figure 5: Air Traffic Controller




However, other key projects continue to experience cost, schedule, and
performance problems. The Inspector General has reported that the costs
of five acquisitions have grown by $3 billion—the equivalent of 1 year’s
budget for the modernization program—and the delay in completing these
acquisitions has ranged from 3 to 5 years.15 Problems in implementing the
Standard Terminal Automation Replacement System are indicative of the
problems that have plagued the modernization program. Since September
1996, FAA has been developing the STARS project to replace the outdated


15
  These five programs are the Wide Area Augmentation System, Standard Terminal
Automation Replacement System, Airport Surveillance Radar-11, Weather and Radar
Processor, and Operational, Supportability, and Implementation System. See U.S.
Department of Transportation, Office of Inspector General, Reauthorization of the Federal
Aviation Administration, CC-2003-058 (Washington, D.C.: Feb. 12, 2003).



Page 17                                              GAO-03-653T FAA Reauthorization
                          computer equipment that air traffic controllers currently use in some
                          facilities to control air traffic within 5 to 50 nautical miles of an airport.

                          The current program presently bears little resemblance to the program
                          envisioned in 1996. Initially FAA anticipated very little software
                          development, planned to install STARS in 172 facilities at a cost of $940
                          million, and expected implementation to begin in 1998 and end in 2005. In
                          1999, FAA modified its acquisition approach (from off-the-shelf software
                          to a combination of customized and off-the-shelf software) and increased
                          to 188 the number of facilities scheduled to receive STARS. Then the
                          agency concluded that it did not have adequate funding to deploy STARS
                          to 188 facilities, and in March 2002, it received approval to deploy STARS
                          at 74 facilities that had frequent equipment failures, were new, or had the
                          digital radar needed to operate STARS.

                          FAA does not yet know to what extent its estimate of STARS’s remaining
                          development costs is reliable because, as we reported in January 2003,
                          FAA lacks accurate, valid, current data on the STARS program’s remaining
                          costs and progress.16 Without such data, FAA is limited in its ability to
                          effectively oversee the contractor’s performance and reliably estimate
                          future costs. Although FAA has adopted clear procurement management
                          policies and procedures, it did not consistently apply this guidance in
                          managing the STARS contract. For example, the development cost
                          estimate is based on the contractor’s projections, which FAA had not yet
                          independently analyzed as its guidance directs. We made several
                          recommendations to improve the management of STARS and subsequent
                          terminal modernization programs and to provide the Congress with more
                          reliable information for oversight. FAA agreed with our recommendations
                          and is implementing them.


Acquisition Management    As part of its procurement reforms, FAA introduced an acquisition
System Is in Place, but   management system in 1996 to reduce the time and cost to deploy new
Weaknesses Limit FAA’s    products and services. In 1999, we reported that this system provided a
                          structured management approach for selecting and controlling
Ability to Manage Its     investments, but still had weaknesses, such as incomplete data on
Investments Effectively   projects’ costs, schedule, benefits, performance, and risks, that limited



                          16
                           U.S. General Accounting Office, National Airspace System: Better Cost Data Could
                          Improve FAA’s Management of the Standard Terminal Automation Replacement System,
                          GAO-03-343 (Washington, D.C.: Jan. 31, 2003).



                          Page 18                                          GAO-03-653T FAA Reauthorization
                          FAA’s ability to manage its investments effectively. We made several
                          recommendations to address these weaknesses and FAA has made
                          changes to better manage its investments. We have since found that FAA is
                          overseeing investment risk and capturing key information from the
                          investment selection process in a management information system and is
                          also developing guidance for validating costs, benefits, and risks.
                          However, FAA is not yet incorporating actual costs from related system
                          development efforts in its processes for estimating the costs of new
                          projects. Moreover, FAA has not yet implemented processes for evaluating
                          projects after implementation in order to identify lessons learned and
                          improve the investment management process. These weaknesses have
                          impeded FAA’s ability to manage its investments effectively and make
                          sound decisions about continuing, modifying, or canceling projects.
                          Because its acquisition reform effort is not complete, major projects
                          continue to face challenges that could affect their costs, schedule, and
                          performance.


Human Capital Reform      In response to claims by FAA that burdensome governmentwide human
Initiatives Do Not        capital rules impeded its ability to hire, train, and deploy personnel, the
Incorporate Elements      Congress exempted FAA from many federal laws17 governing human
                          capital, and the agency began implementing sweeping human capital
Important for Effective   reforms in 1996.18 These reforms addressed three broad areas: (1)
Management                compensation and performance management, (2) workforce management,
                          and (3) labor and employee relations. Figure 6 summarizes our analysis of
                          FAA’s progress in implementing initiatives in each of these areas.




                          17
                           This is a result of 1995 legislation that granted FAA broad exemptions from laws
                          governing federal civilian personnel management found in title 5 of the United States Code.
                          18
                           U.S. General Accounting Office, Human Capital Management: FAA’s Reform Effort
                          Requires a More Strategic Approach, GAO-03-156 (Washington, D.C.: Feb. 3, 2003).



                          Page 19                                                GAO-03-653T FAA Reauthorization
                             Figure 6: Implementation Status of Selected FAA Personnel Reform Initiatives




                             While FAA has fully or partially implemented the initiatives in each of its
                             three broad reform areas, it has not fully incorporated elements that are
                             important to effective human capital management into its overall reform
                             effort. These elements include data collection and analysis, performance
                             goals and measures, and links between reform goals and program goals.
                             Furthermore, as we reported in February 2003, FAA has not developed
                             specific steps and time frames for building these missing elements into its
                             human capital management and for using these elements to evaluate the
                             effects of its personnel reform initiatives, make strategic improvements,
                             and hold the agency’s leadership accountable.


New Structure for            In 2000, AIR-21 and an executive order established a new structure to
Improving the                accelerate the modernization and improve the performance of the air
Performance of the Air       traffic control system. This structure was to consist of (1) a five-member
                             board, called the Air Traffic Services Subcommittee (Subcommittee), to
Traffic Control System Has   oversee the air traffic control system, (2) a chief operating officer to
Not Been Fully               manage the air traffic control system, and (3) a new performance-based
Implemented                  organization, to be known as the Air Traffic Organization, to operate the
                             air traffic control system. Under the act, the Subcommittee provides
                             oversight by, among other things, reviewing and approving strategic plans,
                             large contracts, and budget requests for the air traffic control system.

                             The Subcommittee has been meeting since January 2001, but a chief
                             operating officer has not yet been appointed, and FAA is waiting for an


                             Page 20                                          GAO-03-653T FAA Reauthorization
appointment before putting the new air traffic organization in place. To
date, the Subcommittee has focused on bringing performance
management, accountability, and a more businesslike structure to the air
traffic control system, and it has taken some specific actions, including
reviewing and approving performance metrics, a budget, and three large
procurements that FAA initiated. However, without a chief operating
officer or a performance-based organization, the new structure is not
functioning as intended.

FAA and other stakeholders have suggested reasons for the difficulties in
implementing the new structure and have proposed changes to AIR-21 that
they believe would address these reasons. For example, they have noted
that the Subcommittee’s authority to approve the budget request for the
air traffic control system challenges the administration’s prerogative to
submit a budget request reflecting its priorities, and they have cited
uncertainties in the responsibilities and reporting relationships of the chief
operating officer, the FAA Administrator, and the Subcommittee that, they
say, have made it difficult to hire a chief operating officer. To address
these issues, the administration’s reauthorization proposal would (1)
eliminate the Subcommittee’s approval authority, making the
Subcommittee an advisory body, and (2) designate the FAA Administrator
as the chair of the Subcommittee, thereby strengthening the
Administrator’s authority over, and accountability for the performance of,
the chief operating officer. While these changes would eliminate the
challenge that the Subcommittee’s approval authority poses to the
administration’s prerogatives; would clarify the lines of authority between
the chief operating officer, the FAA Administrator, and the Subcommittee;
and could make it easier to hire a chief operating officer, they would also
limit the power of the Subcommittee. The Senate’s reauthorization
proposal would also designate the FAA Administrator as the chair of the
Subcommittee, but it would retain the Subcommittee’s approval authority.
The merits of these and other proposed changes depend, in large part, on
the extent to which approval authority is viewed as necessary or desirable
to bring about improvements in the performance of the air traffic control
system.




Page 21                                        GAO-03-653T FAA Reauthorization
                          Safety has always been and continues to be FAA’s highest priority. FAA
FAA Is Implementing       has taken a number of important steps to improve aviation safety;
Safety Initiatives and    however, its planning and implementation could sometimes be more
                          effective. In addition, with the transfer of most aviation security
Faces New                 responsibilities to the Transportation Security Administration (TSA), FAA
Challenges in             faces the challenge of maintaining close coordination with TSA to ensure
                          that aircraft safety is maintained as TSA implements new security
Ensuring That             enhancements.
Security
Enhancements
Maintain Aircraft
Safety

FAA and Industry Have     Reducing fatal aviation accidents is key to improving aviation safety.
Taken Actions to Reduce   FAA’s centerpiece for reaching this goal is Safer Skies, an initiative that
the Fatal Accident Rate   dates back to 1998, when FAA and aviation industry representatives
                          worked together to identify the major causes of fatal accidents and to
                          design and implement actions to prevent future accidents. Safer Skies is
                          intended to reduce the fatal accident rate for commercial aviation by 80
                          percent and to reduce the number of fatal accidents for general aviation to
                          350 a year by 2007.19 Because many preventive actions have not yet been
                          fully implemented, it may be too early to assess their effectiveness.
                          Achieving the initiative’s goals will require FAA to systematically
                          implement preventive actions, such as requiring additional safety
                          inspections of aircraft, and to maintain good data to monitor the progress
                          of these actions and evaluate their effectiveness. As of February 2003, 44
                          preventive actions had been undertaken—of which 16 are completed and
                          28 are under way, according to FAA.




                          19
                            Commercial aviation includes both large air carrier operations and smaller commuter
                          operations. General aviation includes a wide variety of aircraft, ranging from corporate jets
                          to small piston-engine aircraft as well as helicopters, gliders, and aircraft used in
                          operations such as firefighting and agricultural spraying.



                          Page 22                                                 GAO-03-653T FAA Reauthorization
FAA’s New Safety             Improving the effectiveness of FAA’s inspections of airline operations is
Inspection System Offers     key to improving aviation safety. The FAA Administrator has noted that
Promise, but Problems        perhaps the greatest support the agency can provide to the industry is a
                             robust safety oversight role that will not waver in difficult times. FAA’s
Still Need to Be Addressed   new inspection program, the Air Transportation Oversight System, is
                             central to this oversight role. This program, which was implemented in
                             1998, aims to ensure not only that airlines comply with FAA’s safety
                             requirements but also that they have operating systems to control risks
                             and prevent accidents. Figure 7 shows an FAA inspector inspecting an
                             aircraft for compliance with FAA’s safety requirements.

                             Figure 7: FAA Safety Inspection in Progress




                             Source: FAA.


                             We reported in 1999 that FAA had not completed many critical steps, such
                             as developing guidance for inspectors and creating databases to use in
                             prioritizing inspection resources, before implementing the new inspection
                             system in 1998.20 As a result, the agency’s ability to conduct effective


                             20
                               U.S. General Accounting Office, Aviation Safety: FAA’s New Inspection System Offers
                             Promise, but Problems Need to Be Addressed, GAO/RCED-99-183 (Washington, D.C.: June
                             28, 1999).



                             Page 23                                            GAO-03-653T FAA Reauthorization
                           inspections remains limited. FAA has begun to address some of the
                           problems that we identified with the guidance and the databases.
                           However, according to a 2002 review by the DOT Inspector General, many
                           of the problems that we identified persist, and the program’s
                           implementation remains inconsistent because FAA has not established
                           strong oversight and accountability procedures.21 This situation limits
                           FAA’s ability to conduct more systematic, structured inspections; analyze
                           the resulting data to identify safety trends; and target its resources to the
                           greatest aviation safety risks.


Aviation Safety and        Some key efforts under way to improve aviation security require
Security Require Close     interagency coordination between FAA and TSA because they could also
Coordination between FAA   affect aircraft safety. While TSA is responsible for most issues related to
                           aviation security, FAA retains responsibility for those related to aviation
and TSA                    safety, including approving the initial aircraft design, structural
                           modifications, and procedures for emergency evacuation and the
                           transportation of hazardous cargo.22 For example, strengthening cockpit
                           doors to increase cockpit security during flights was one of the
                           government’s earliest responses to the September 11 terrorist attacks.
                           Because the modifications could increase the weight of the doors and
                           change the way they are attached to the aircraft, FAA has been certifying
                           these modifications to ensure that they will not cause decompression
                           during flight or affect the aircraft’s structural integrity. In addition, new
                           security procedures require that the cockpit door remain locked during
                           flight and that access to the cockpit be restricted to the flight crew. As a
                           result, senior flight attendants will no longer carry keys to the cockpit, and
                           FAA is approving changes to the procedures for rescuing the flight crew in
                           an emergency.

                           FAA is also responsible for the safe transport of dangerous materials
                           onboard aircraft. Dangerous goods are chemical (including infectious)
                           substances (or anything containing such substances) that pose a threat to
                           public safety or the environment during transportation. When these goods
                           are properly packaged, labeled, and stowed onboard, they can be



                           21
                            U.S. Department of Transportation, Office of Inspector General, Report on the Air
                           Transportation Oversight System: Federal Aviation Administration, AV-2002-088
                           (Washington, D.C.: Apr. 8, 2002).
                           22
                            FAA has responsibility for maintaining the security of its air traffic control facilities and
                           computer systems.



                           Page 24                                                   GAO-03-653T FAA Reauthorization
                       transported safely, but when they are not, they can pose significant threats
                       to people and property. TSA is responsible for screening all passengers
                       and property, including cargo, that will be carried aboard an aircraft. If,
                       during the screening of passengers or baggage, TSA discovers dangerous
                       goods that are not properly packaged or labeled, TSA will need to
                       coordinate and share information with FAA, which is responsible for
                       enforcing any regulatory violations.

                       In addition, aircraft crashes could fall under the jurisdiction of either FAA
                       or TSA, depending on whether they were the results of accidents (FAA) or
                       deliberate acts (TSA). It will be important for the two agencies to work
                       together closely during the initial stages of crash investigations. To
                       facilitate coordination on these and other security issues that affect
                       aviation safety, TSA and FAA signed a memorandum of agreement on
                       February 28, 2003. In addition, on March 4, 2003, the Secretary of
                       Transportation agreed to assign a senior official within the Office of the
                       Secretary to serve as DOT’s primary liaison to TSA. It is important that
                       both FAA and TSA remain committed to coordinating closely on safety
                       and security issues and that congressional oversight ensures that the
                       memorandum of agreement is implemented.


                       As the administration and the Congress focus on increasing aviation
FAA Faces Challenges   capacity, efficiency, and safety, they do so in an extremely challenging
in Implementing        fiscal environment—the federal budget deficit has increased and
                       competition for federal resources has intensified. Moreover, as we
Controls over Its      mentioned previously in this statement, revenues to the aviation Trust
Costs                  Fund, which is the source of funding for most of FAA’s operations,
                       facilities and equipment, and grant programs, have declined in recent
                       years while outlays have increased. It is, therefore, especially important
                       that FAA control or reduce costs, run its programs efficiently, and detect
                       and prevent fraudulent activities. We and DOT’s Inspector General have
                       reported that improvements are needed in these areas.

                       For example, in March 2003, we reported that weaknesses in FAA’s
                       purchase card23 controls resulted in instances of improper, wasteful, and




                       23
                         As of January 2002, over 8,000 FAA employees (17 percent of its workforce) had been
                       issued commercial purchase cards. In fiscal year 2001, FAA made over 364,000 purchases
                       using these cards.



                       Page 25                                              GAO-03-653T FAA Reauthorization
questionable purchases, as well as missing and stolen assets.24 These
internal control weaknesses included inadequate segregation of duties
(i.e., the cardholder requested the purchase, placed the order, and picked
up or received the goods without any other review or approval), lax
supervisory review and approval, missing purchase documents, inadequate
training, and insufficient program monitoring activities, all of which
created an environment vulnerable to fraud, waste, and abuse. During
fiscal year 2000, these weaknesses contributed to $5.4 million in improper
purchases by FAA employees and over $630,000 in purchases that were
considered wasteful or questionable because they were missing a receipt
to show what was actually purchased. To reduce the likelihood of
improper and wasteful purchases, we recommended a number of actions
to strengthen the internal controls over FAA’s purchase card program,
such as developing detailed procedures that specify the type and extent of
review or approval that is expected. FAA agreed with our
recommendations.

In addition, DOT’s Inspector General reported in January 2003 that FAA
needs to contain increases in its operating costs and improve its internal
controls over costs.25 Over the past 6 years, FAA’s operations budget,
which is 73 percent personnel costs, increased by over 41 percent, from
$5.3 billion in fiscal year 1998 to $7.5 billion in fiscal year 2003. The
Inspector General noted that FAA has made extensive use of its human
capital flexibilities to substantially increase salaries, but has done little to
reduce operating costs. FAA has improved its ability to track its costs by
partially implementing a new cost accounting system that the Congress
directed it to develop in 1996. The new system, which FAA expects to be
fully operational by the end of 2003, now tracks 70 percent of the
personnel, overhead, and other costs related to air traffic services.
However, DOT’s Inspector General has reported problems with the labor
distribution system, which is part of the cost accounting system and is
used to account for and distribute air traffic controller labor costs of about
$3.1 billion annually to specific facilities and functions. The Inspector
General noted that the system omitted important internal controls needed
to ensure that the time worked by air traffic controllers would be



24
  U.S. General Accounting Office, FAA Purchase Cards: Weak Controls Resulted in
Instances of Improper and Wasteful Purchases and Missing Assets, GAO-03-405
(Washington, D.C.: Mar. 21, 2003).
25
 Department of Transportation, Office of Inspector General, DOT’s Top Management
Challenges (Washington, D.C.: Jan. 21, 2003).



Page 26                                             GAO-03-653T FAA Reauthorization
              accurately recorded in the accounting system and paid from the proper
              account. The Inspector General brought these deficiencies to the attention
              of FAA, and the Administrator agreed to correct them. The Inspector
              General further noted that the system as designed could provide
              workforce data that would help determine how many controllers are
              needed and where. These data would assist FAA in planning for the
              anticipated retirement of large numbers of air traffic controllers in the
              near and long term. 26 Congressional oversight is important to ensure that
              FAA follows through and corrects the problems that we and the Inspector
              General have identified so that FAA can spend its resources on projects
              and services that will provide the greatest return on the public’s
              investment.


              This statement is based primarily on issued reports that are listed under
Scope and     Related GAO Products. However, the sections on the Airport and Airway
Methodology   Trust Fund and the Air Traffic Services Subcommittee reflect our ongoing
              work for this Committee. As a result, the results of this work that we
              discuss in this testimony are still preliminary.

              To assess the current and projected financial status of the Airport and
              Airway Trust Fund, we obtained financial data from FAA and interviewed
              FAA officials familiar with the information. To assess the status of efforts
              to implement the new structure established under AIR-21 to improve the
              oversight, management, and operation of the air traffic control system, we
              analyzed the legislation and related executive order, the administration’s
              reauthorization proposal, and the first report of the Air Traffic Services
              Subcommittee. We also interviewed officials from FAA, the Air Traffic
              Services Subcommittee, and aviation industry organizations. We
              performed our work in accordance with generally accepted government
              auditing standards.




              26
               U.S. General Accounting Office, Air Traffic Control: FAA Needs to Better Prepare for
              Impending Wave of Controller Attrition, GAO-02-591 (Washington, D.C.: June 14, 2002).



              Page 27                                              GAO-03-653T FAA Reauthorization
                      For further information on this testimony, please contact Gerald
Contact Information   Dillingham at (202) 512-2834. Individuals making key contributions to this
                      testimony include Tammy Conquest, Howard Cott, Elizabeth Eisenstadt,
                      Edward Laughlin, Belva Martin, Maren McAvoy, John W. Shumann, Teresa
                      Spisak, and Richard Swayze.




                      Page 28                                     GAO-03-653T FAA Reauthorization
Related GAO Products


             FAA Purchase Cards: Weak Controls Resulted in Instances of Improper
             and Wasteful Purchases and Missing Assets. GAO-03-405. Washington,
             D.C.: March 21, 2003.

             Commercial Aviation: Issues Regarding Federal Assistance for
             Enhancing Air Service to Small Communities. GAO-03-540T.
             Washington, D.C.: March 11, 2003.

             Airport Finance: Past Funding Levels May Not Be Sufficient to Cover
             Airports’ Planned Capital Development. GAO-03-497T. Washington, D.C.:
             February 25, 2003.

             National Airspace System: Reauthorizing FAA Provides Opportunities
             and Options to Address Challenges. GAO-03-473T. Washington, D.C.:
             February 12, 2003.

             Aviation Finance: Implementation of General Aviation Entitlement
             Grants. GAO-03-347. Washington, D.C.: February 11, 2003.

             Human Capital Management: FAA’s Reform Effort Requires a More
             Strategic Approach. GAO-03-156. Washington, D.C.: February 3, 2003.

             National Airspace System: Better Cost Data Could Improve FAA’s
             Management of the Standard Terminal Automation Replacement
             System. GAO-03-343. Washington, D.C.: January 31, 2003.

             Aviation Infrastructure: Challenges Related to Building Runways and
             Actions to Address Them. GAO-03-164. Washington, D.C.: January 30,
             2003.

             Aviation Safety: Undeclared Shipments of Dangerous Goods and DOT’s
             Enforcement Approach. GAO-03-22. Washington, D.C.: January 10, 2003.

             High-Risk Series: An Update. GAO-03-119. Washington, D.C.: January
             2003.

             Air Traffic Control: Impact of Revised Personnel Relocation Policies Is
             Uncertain. GAO-03-141. Washington, D.C.: October 31, 2002.

             Airport Finance: Using Airport Grant Funds for Security Projects Has
             Affected Some Development Projects. GAO-03-27. Washington, D.C.:
             October 15, 2002.



             Page 29                                     GAO-03-653T FAA Reauthorization
National Airspace System: Status of FAA’s Standard Terminal
Automation Replacement System. GAO-02-1071. Washington, D.C.:
September 17, 2002.

Options to Enhance the Long-term Viability of the Essential Air Service
Program. GAO-02-997R. Washington, D.C.: August 30, 2002.

Air Traffic Control: FAA Needs to Better Prepare for Impending Wave of
Controller Attrition. GAO-02-591. Washington, D.C.: June 14, 2002.

Aviation Finance: Distribution of Airport Grant Funds Complied with
Statutory Requirements. GAO-02-283. Washington, D.C.: April 30, 2002.

Department of Transportation, Transportation Security
Administration: Aviation Security Infrastructure Fees. GAO-02-484R.
Washington, D.C.: March 11, 2002.

Applying Agreed-upon Procedures: Airport and Airway Trust Fund
Excise Taxes. GAO-02-380R. Washington, D.C.: February 15, 2002.

National Airspace System: Long-Term Capacity Planning Needed
Despite Recent Reduction in Flight Delays. GAO-02-185. Washington,
D.C.: December 14, 2001.

National Airspace System: Free Flight Tools Show Promise, but
Implementation Challenges Remain. GAO-01-932. Washington, D.C.:
August 31, 2001.

Air Traffic Control: Role of FAA’s Modernization Program in Reducing
Delays and Congestion. GAO-01-725T. Washington, D.C.: May 10, 2001.

Aviation Safety: Safer Skies Initiative Has Taken Initial Steps to Reduce
Accident Rates by 2007. GAO/RCED-00-111. Washington, D.C.: June 30,
2000.

National Airspace System: Problems Plaguing the Wide Area
Augmentation System and FAA’s Actions to Address Them. GAO/T-
RCED-00-229. Washington, D.C.: June 29, 2000.

National Airspace System: Persistent Problems in FAA’s New
Navigation System Highlight Need for Periodic Reevaluation.
GAO/RCED/AIMD-00-130. Washington, D.C.: June 12, 2000.



Page 30                                     GAO-03-653T FAA Reauthorization
           Federal Aviation Administration: Challenges in Modernizing the
           Agency. GAO/T-RCED/AIMD-00-87. Washington, D.C.: February 3, 2000.

           Air Traffic Control: Status of FAA’s Implementation of the Display
           System Replacement Project. GAO/T-RCED-00-19. Washington, D.C.:
           October 11, 1999.

           Aviation Safety: FAA’s New Inspection System Offers Promise, but
           Problems Need to Be Addressed. GAO/RCED-99-183. Washington, D.C.:
           June 28, 1999.

           General Aviation Airports: Oversight and Funding. GAO/T-RCED-99-214.
           Washington, D.C.: June 9, 1999.

           Passenger Facility Charges: Program Implementation and the Potential
           Effects of Proposed Changes. GAO/RCED-99-138. Washington, D.C.: May
           19, 1999.

           Airport Improvement Program: Analysis of Discretionary Spending for
           Fiscal Years 1996-98. GAO/RCED-99-160R. Washington, D.C.: May 18,
           1999.

           Air Traffic Control: FAA’s Modernization Investment Management
           Approach Could Be Strengthened. GAO/RCED/AIMD-99-88. Washington,
           D.C.: April 30, 1999.

           Air Traffic Control: Observations on FAA’s Air Traffic Control
           Modernization Program. GAO/T-RCED/AIMD-99-137. Washington, D.C.:
           March 25, 1999.

           Federal Aviation Administration: Financial Management Issues.
           GAO/T-AIMD-99-122. Washington, D.C.: March 18, 1999.

           Airport Financing: Smaller Airports Face Future Funding Shortfalls.
           GAO/T-RCED-99-96. Washington, D.C.: February 22, 1999.

           Airport Financing: Annual Funding As Much As $3 Billion Less Than
           Planned Development. GAO/T-RCED-99-84. Washington, D.C.: February
           10, 1999.




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